Earlier today, the Trump administration, House and Senate Republican leadership, and the Chairmen of the House Committee on Ways & Means and the Senate Committee on Finance released a long-awaited “unified” framework that will serve as the basis for legislative efforts to reform the tax code. The document’s unveiling, which has been negotiated behind the scenes for several months, is expected to kick-off efforts to comprehensively reform the nation’s tax code for the first time in decades.
Highlights of the “Unified Framework for Fixing Our Broken Tax Code” include:
- Limiting the maximum tax rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations to 25 percent;
- Reducing the corporate tax rate to 20 percent;
- Repealing the estate tax and the generation-skipping transfer tax;
- Allowing businesses to immediately write off (or “expense”) the cost of new investments in depreciable assets other than structures made after September 27, 2017, for at least five years; and
- Partially limiting the net interest expense deduction for C corporations while Congress will determine treatment of interest paid by non-corporate taxpayers.
The document is silent on many important issues for AED members, including 1031 exchanges (“like-kind exchanges”), the last in, first out (“LIFO”) accounting method and new revenues for the Highway Trust Fund (HTF) to invest in road and bridge projects.
Remember, the document is merely a framework and isn’t legislative text. Reforming the tax code will be a long and complicated effort. Stay tuned to AED for future updates.
If you have any comments on the framework, please reach out to AED’s Vice President of Government Affairs Daniel B. Fisher.
To view comments submitted by AED to the Senate Finance Committee outlining the association’s tax reform priorities, click here.
To view a letter sent to Congress regarding the importance of the business interest deduction, click here.